Nigeria’s telecommunications sector is set to address a significant infrastructure funding gap of N551.23 billion ($360 million) following the recent approval of a 50 percent increase in service tariffs, according to a report by GSMA, the global telecom industry association.
In its newly published “Sub-Saharan Africa 2024 Year in Review” report, GSMA revealed that Nigeria requires an estimated $360 million to achieve 98 percent 4G network coverage. While 4G availability reached 84 percent nationwide in 2024—up from 41 percent in 2019—rural areas still lag behind with only 48 percent coverage.
GSMA emphasized that eliminating sector-specific levies and revising tariff structures could unlock about N244.99 billion ($160 million) in investments, effectively narrowing the infrastructure deficit by 44 percent. The report highlighted that regulatory policies, such as removing infrastructure taxes and easing price controls, could further reduce the funding shortfall to $200 million.
The Need for Expansion
With 4G currently dominating Nigeria’s telecom landscape—accounting for 46.27 percent of the country’s 157.32 million mobile subscribers as of October 2024—enhancing coverage is crucial for improving connectivity and boosting industry revenues. Expanding the network could drive higher user adoption rates and position Nigerian telecom firms competitively within the African market.
Despite the urgency to expand, telecom operators have scaled down capital investments due to financial pressures. Between January and September 2024, MTN Nigeria’s capital expenditure (capex) plummeted by 27.79 percent to N217.64 billion, while Airtel Nigeria’s spending dropped by 36.59 percent to $149 million.
MTN Nigeria’s CEO, Karl Toriola, previously warned that without tariff adjustments, telecom operators might face the difficult choice of shutting down operations or incurring substantial financial losses. The industry reported a 300 percent increase in operational costs, prompting operators to push for a 100 percent tariff hike.
Following extensive consultations, the Nigerian Communications Commission (NCC) approved a 50 percent tariff increase to ensure the financial sustainability of the sector.
Breakdown of the New Tariffs
The revised tariff structure marks the first major adjustment in a decade. Under the new rates, the minimum call tariff has increased from N6.40 to N9.60 per minute, while SMS charges have risen from N4 to N6. Similarly, the cost of 1GB of data now stands at N431.25, up from N287.50. On average, call charges will increase from N11 to N16.50 per minute.
An analysis by BusinessDay suggests that this adjustment could boost telcos’ total revenue from N4.39 trillion to at least N6.59 trillion, potentially restoring their financial health and ensuring continued investment in infrastructure.
According to the NCC, the increase is essential to sustaining infrastructure improvements and enhancing service delivery. “This adjustment is necessary to bridge the gap between rising operational expenses and current service charges, while ensuring consumers continue to receive quality services,” the commission stated.
Industry Reactions
Telecom executives welcomed the price adjustment, noting that it would enable further investments in network expansion and service enhancements. MTN’s Toriola stressed the importance of sustaining capital investment to ensure reliable service delivery. Similarly, Airtel Nigeria’s CEO, Dinesh Balsingh, described the tariff revision as a critical step toward sustaining the industry’s growth and meeting the evolving needs of customers.
However, stakeholders have voiced concerns over the timing of the price hike, especially given Nigeria’s economic challenges. With inflation reaching a record high of 34.8 percent in December 2024, consumer advocacy groups, including the National Association of Telecom Subscribers (NATCOMS), have expressed opposition. NATCOMS has threatened legal action, arguing that the increase is detrimental to consumers.
Additionally, the Nigerian Labour Congress (NLC) has urged citizens to boycott telecom services if the price hike is not reconsidered.
Looking Ahead
Despite the backlash, the Nigerian government maintains that further tariff adjustments may be necessary to meet the growing demand for telecom services. Finance Minister Wale Edun emphasized that sustaining quality services will require continued investment, suggesting that future reviews and consultations on pricing will be an ongoing process.
“We need telecom operators to provide top-notch services without interruptions, and this tariff increase is only the beginning. More reviews and discussions will follow to ensure the sector’s long-term viability,” Edun stated.
While the tariff adjustment is expected to drive improvements in network quality and service reliability, it remains to be seen how consumers will cope with the increased costs in an already challenging economic climate.
